\u3000\u3000 Qinghai Salt Lake Industry Co.Ltd(000792) (000792)
The company is the earliest and largest potassium chloride production enterprise in China, and relies on resource advantages to layout salt lake lithium extraction. In the first half of 2021, potassium chloride and lithium carbonate business contributed major profits, of which potassium chloride and lithium carbonate accounted for 91.32% and 7.76% respectively. In the first three quarters of 2021, the company realized an operating revenue of 10.799 billion yuan and a net profit attributable to the parent company of 3.715 billion yuan, a year-on-year increase of 75.41%.
The company focuses on potassium lithium business, with early layout and high production capacity. In terms of potassium chloride, at present, the company has a capacity of 5 million tons of potassium chloride, accounting for 64% of the country’s total capacity. In 2020, the company’s potassium fertilizer output was 5.5175 million tons, ranking first in China, accounting for 78.37% in the Chinese market. In terms of lithium carbonate, the company has obvious first mover advantages and has 15 years of experience in the industrialization of lithium extraction from salt lakes. At present, the company has a capacity of 30000 tons of lithium carbonate, and another 30000 tons of cooperation project with Byd Company Limited(002594) is in the pilot stage.
The price of potassium chloride continued to rise, and the role of profit ballast was highlighted. As of February 7, 2022, the average market price of potassium chloride in China was reported to be 3475 yuan / ton, up 70.85% year-on-year. The price of potassium chloride returned to the upward channel after 12 years of downturn. Potassium chloride is highly dependent on imports and is greatly affected by the international market. At present, the international price of potassium chloride is high and rising under the influence of sanctions and other factors in Belarus. Therefore, it is expected that China’s potassium chloride market will remain highly prosperous. Combined with the company’s capacity advantages, it is expected that the potassium chloride business will contribute huge profits to the company and become a ballast for the company’s performance growth.
The output of new energy vehicles increased rapidly, and lithium extraction from Salt Lake opened the second growth curve. In 2021, the output of Shanxi Guoxin Energy Corporation Limited(600617) vehicles reached 3.545 million, an increase of 173.7% year-on-year. With the upswing of the new energy industry, the demand for lithium carbonate is expected to further increase. As of February 7, 2022, the price of lithium carbonate has increased from 53000 yuan / ton at the beginning of 2021 to 380000 Yuan / ton, with a year-on-year increase of 419.5%. With the improvement of the prosperity of the new energy industry, the company’s entry into the new energy field will bring double growth of “performance” and “valuation”, opening the second growth curve.
Investment advice
Potassium chloride and lithium carbonate industries are highly prosperous, and the company’s performance is expected to continue to grow. It is expected that the operating revenue of the company in 2021, 2022 and 2023 will be RMB 14704, 202.87 and 22.532 billion respectively, and the net profit attributable to the parent company will be RMB 4.059, 69.95 and 7.422 billion respectively. Combined with the company’s resource advantages, we are optimistic about the development of the company. “Recommend” strongly for the first time.
Risk tips
Upgrading of safety and environmental protection policies, abnormal price fluctuations of main products, reduction of salt lake resources in China, etc.
